Question
Wright Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $1,000,000 and a 5-year life. There
Wright Corp. is considering the purchase of a new piece of equipment, which would have an initial cost of $1,000,000 and a 5-year life. There is no salvage value for the equipment. The increase in net income each year of the equipment's life would be as follows:
| Year 1 | $ | 415,000 |
| Year 2 | $ | 390,000 |
| Year 3 | $ | 325,000 |
| Year 4 | $ | 270,000 |
| Year 5 | $ | 225,000 |
What is the payback period?
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Financial Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
4th Edition
0471730513, 978-0471730514
